Is “Herd Mentality” Damaging Federal Employees’ Retirement Dreams?

Taking investment advice from your co-workers can wreak havoc on your retirement savings and your TSP account.

Many federal employees may be damaging their retirement plans by indiscriminately adopting the behavior of their colleagues. By adhering to the pack mentality, they could be neglecting their individual investment objectives. 

Sink or swim, we’ll do it together

It’s generally accepted that we don’t all drive the same type of vehicles, have the same political views, dress the same, live in identical neighborhoods, or appreciate the same kind of music. Why, then, is it widely conceded, “everyone is doing it that way” is an appropriate mindset for retirement savings/allocating or planning? Would you believe some may still be falling victim to good old fashion “peer pressure” (like in high school)?

“Going along,” “running with the pack,” and “group think” are all ways to describe “Herd Mentality.” 

According to psychology professor Noam Shpancer Ph.D., to feel like we belong and to stay content in our conformity, human beings rely on two types of social cues. In a group environment, we first look for informational cues (what’s going on), then normative cues (looking to the group to learn how to react). Dr. Schpancer also says, “We are often not even aware when we are conforming. It is our home base, our default mode.”

I imagine it is also part of our psyche to accept failing…provided we don’t fail more than our peers. Therefore, couldn’t it be argued, good old-fashioned “group think” might well harm feds’ chances to pursue their retirement goals? Rather than taking a chance of underperforming the group, are federal employees blindly following the herd?

I don’t know about you, but among my friends and me growing up, we took our first alcoholic drink, smoked our first cigarettes, experienced our first kisses, and tipped our first cow because we wanted to look “cool” in front of the others. We had a desire to be accepted by our peers and especially the “ring leader.”

Who is the retirement “Ring Leader” in your herd?

We tend to accept, and even depend on, advice from someone we know over the advice of a qualified authority. I know of people that seek financial advice from their mechanic and medical advice from their hairdresser! Why? Because they trust their mechanic and hairdresser. Rationale perhaps being, “This person cares about me and wouldn’t (intentionally) give me bad advice.” 

In virtually every federal office I know, there is always that one person that has “read up on” or “researched” the “right way” to invest. Then they share their findings with their co-workers. The herd believes this person has all the answers, and “peer pressure” tenets state that the herd follows the Shepherd.

Think about it for a moment: who is this person in your office? Can you picture them? They are probably goodhearted and only want to help everyone make sound financial choices. Heck, they did all the legwork; all you have to do is follow their lead. Perhaps you would even feel a little guilty (or ignorant) if you didn’t take their advice. Now, do you know who I am talking about? It’s ok to grin. You probably just identified your herd’s unequivocal financial authority.

So, what could possibly be wrong with following the guidance and advice from someone you know and trust? The thing missing from the group-think mentality is that retirement is more of an individual undertaking than many other issues. 

“If your friends all jumped off a bridge, would you follow them?”

When it comes to developing an intelligent investment/retirement plan, “Herd Mentality” could fail most (if not all) of the herd. Not everyone needs to eat the same food (from the proverbial trough of investment suitability) at the same pace. A perhaps wiser course could be recognizing and pursuing individual distinctiveness and needs when pursuing your financial retirement goals. Consuming your own individualized meal plan could conceivably even avoid malnourishment at an overcrowded trough. 

Good intentions, psychological motives, peer pressure, and group-think cannot change the fact that your needs now and during retirement are (and will be) different than that of the herd. Therefore, does it seem reasonable to manage individual TSP allocations on a consensus or peer pressure basis? 

Pam (not her real name) is a 30+ year federal employee and is within 2 years of her planned retirement. 

Pam has been “going along” with the well-meaning TSP advice of a co-worker for nearly 15 years. She, and many of her co-workers, have allocated their TSP accounts virtually identically with the help of their TSP Sage. 

Since Pam is nearing retirement, she decided to schedule a Federal Retirement Readiness Review to see if her retirement income bases are covered. Pam was surprised to learn that she had been availing herself to a more conservative (possibly less growth potential) TSP investment approach than may have been desired for her needs. 

What Pam and “Pam’s Office Financial Guru” didn’t understand was that timing the markets can be very risky. Accurately and consistently predicting what is going to happen in the future to the index funds inside the TSP would be the stuff of legends.

What is perhaps more likely to happen is 13th hour (after the fact) reallocations. This could allow for missing the upward market tics and seizing much of the downward market losses. Not a terribly desirable outcome.

In Pam’s case, there appeared to be a lot of panic-induced moves over the years. Pam didn’t realize it, but her office ring leader was apparently a much more conservative investor than she was. 

Risk/Reward distinctive goals

Understanding and adhering to an individual’s “Risk Tolerance” might be a more reliable approach to investment allocating than following the herd.

Risk tolerance is a measure of an individual’s boundary for investment losses and is often held in balance with their reasonable growth needs. This measurement is unique for everyone. When a good balance is achieved, a fed may find themselves in their very own investment comfort zone, one that could pursue desired gains while taking a strategic stance to mitigate exposure to traumatic losses.  

Pam’s 15-year risk tolerance levels were basically monitored and directed by a co-worker with a much lower tolerance for investment losses. For Pam, this might have meant an approach with a lower risk/return potential. 

Since her review, Pam elected to redirect her TSP to better align with her risk tolerance. She has also increased her retirement contributions and is taking a deliberately higher risk/return approach with a small portion of her retirement savings.

Desiring to be part of a group, feeling included, and doing things together is understandable and part of the human condition. But, some things should be done without the group’s assistance or participation.

Suggestions of things you may want to put on your workgroup “Non-Herd” list:

  • Honeymoons
  • Setting up financial passwords
  • Proctologist exams
  • Floss after enjoying a roast beef and corn-on-the-cobb lunch
  • Allocating your TSP (or other retirement savings accounts).

Some things just shouldn’t be done as a group!

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.  Investing involves risks, including the loss of principal.  No strategy assures success or protects against loss. Silverlight Financial, Infinity Financial Services, and its affiliates do not provide tax, legal, or accounting advice. This material is not intended to provide and should not be relied on for tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any transaction. For a list of states in which I am registered to do business, please visit

Securities offered through Infinity Financial, member FINRA/SIPC.

About the Author

Randy Silvey is the published author of You FIRST, Federal Employees Retirement Guide, one of the bestselling books of its kind on Amazon and Kindle. For over 18 years, he’s been educating and guiding Feds in pursuing wealthier retirement lifestyles. Randy can be reached at 816-524-1515 or visit his website at Securities offered through Infinity Financial Services. Member FINRA/SIPC.